Crystal Wealth Newsroom
Receiving a pension? Remember to check your minimums
One of the knock-on effects of rising and falling markets is the impact it has on the minimum pension – so, if you have elected to receive the minimum, you’ll likely see a decrease in the pension you receive.
Therefore, it’s important to assess whether the ‘new’ minimum provides you with enough money or if you need to adjust the amount you’re receiving.
“It’s a good time to have a chat with your adviser to work out your cash flow and what you need now,” says Louise Lakomy, Director at Crystal Wealth Partners.
“There are ways of offsetting the drop in payments, so you’re not always having to draw more out, and we’re using this opportunity to update asset balances with Centrelink.
“If your pension has dropped, it’s important to do that and update your current balances, which may increase your aged pension allowance.”
Louise says it’s vital to remember that markets go up and down, so it’s important to both take a longer-term view and focus on what you need on a day-to-day basis – particularly if you haven’t elected to receive the minimum.
“Clients will often ask whether they should reduce their pension because the market value has changed, and that’s the million dollar question,” she says.
“Generally, my answer is no, as long as we’ve factored in your cost of living and you’re going to be able to afford that with your balance, then we should be okay.
“We’re not saying ‘your balance has dropped, so we’re going to have to drop your pension by half’, or anything like that – we just don’t necessarily think there should be that knee-jerk reaction.”
Another thing to be aware of is how your minimums may have changed, bearing in mind the government has rolled over the 50% reduction in minimum pensions for the new financial year.
| Age – 1 July 2022 | Reduced minimum drawdown rates 22/23 | Standard minimum drawdown rates 23/24 |
| Under 65 | 2.0% | 4.0% |
| 65-74 | 2.5% | 5.0% |
| 75-79 | 3.0% | 6.0% |
| 80-84 | 3.5% | 7.0% |
| 85-89 | 4.5% | 9.0% |
| 90-94 | 5.5% | 11.0% |
| 95 and over | 7.0% | 14.0% |
If you’d like to speak with your adviser about your pension or any aspect of cash flow planning, contact the team at Crystal Wealth Partners.